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Trade Liberalisation

Volume 403: debated on Monday 10 March 2003

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To ask the Secretary of State for International Development if she will make a statement on the likely impact on developing countries of trade liberalisation, with particular reference to the control of water supplies. [101873]

The impact on developing countries of trade liberalisation depends on a variety of factors such as the nature and extent of initial trade distortions, whether trade liberalisation is comprehensive or limited to a few sectors, and whether other countries also open up their markets. As a result, estimates of impact vary widely. One assessment by the World Bank indicates that comprehensive multilateral trade liberalisation backed up with increased aid for trade related infrastructure (e.g. roads and ports) could lift an additional 300 million people out of poverty by 2015.The General Agreement on Trade in Services (GATS) provides the framework for multilateral (WTO) negotiations between countries on the liberalisation of trade in services, including water supply. The GATS is a bottom-up agreement, which means that countries themselves decide whether—and when—to open up their service sectors to foreign competition. Nor does GATS require or encourage countries to privatise public services. Should WTO members choose to involve the private sector, there is nothing under the GATS to prevent or pressure them into a specific public or private service delivery model.My Department's priority is to make sure the poor benefit from improved water and sanitation services, through effective regulation and appropriate tariff structures, including subsidies for the poorest, if required. In all water and sanitation services, whether municipalities chose to involve the private sector or not, the principle of cost recovery is important and must be recognised as central to sustainability. Effective institutions that are accountable, representative and transparent are essential to manage and regulate the water sector.